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Pactum, a platform that leverages AI to automatically negotiate supplier contracts for enterprises, today announced it has raised $11 million in a series A round of funding led by Atomico.
The company’s “negotiation-as-a-service” platform hits general availability from today and has already been used by several major enterprises. Clients include Walmart, the world’s largest retailer, which first signed up for a pilot program last year to automate negotiations with its supplier network.
Pactum’s software essentially scans a contract, extracts what it believes to be the key priorities, and then sets about negotiating terms with the supplier through a chatbot.
At its core, Pactum is all about making contract negotiations less laborious and enabling businesses to go beyond the few key terms that normally revolve around price and payments.
“When we work with our customers, we go through a discovery process lasting several weeks,” Pactum cofounder and CTO Kristjan Korjus told VentureBeat. “During that time, we have identified up to 30 items to negotiate about in just one use case alone. Each of these items can be exchanged for value for both sides. Examples include freight, warehousing, contract length, contract cancelation terms, growth rebates, and so on.”
The full deployment process can take a few months, including interviews with key stakeholders involved in the contract process. After Pactum’s system is built for the company in question, it’s able to work completely autonomously. This includes making decisions based on data, including current commercial terms, gleaned from enterprise resource planning (ERP) systems and other sources.
“The system learns from each negotiation, so every negotiation will make every other negotiation better,” Korjus explained. “This creates a virtuous cycle.”
It’s worth noting that Pactum may be best suited to smaller contracts or contracts that involve renegotiating an existing deal. This may be particularly true for larger enterprises that have dozens or hundreds of smaller contracts with different suppliers — and is why Pactum is targeting businesses with more than $1 billion in revenue that are more likely to benefit from this type of technology.
Pactum isn’t purely about helping its own customers — it has to benefit both sides, as any typical negotiation would.
“This is the quickest way to reach a Pareto optimal outcome — which is a situation where one party (supplier or the enterprise) can be better off without making the other party worse off,” Korjus said.
Show me the money
Founded out of Estonia in 2019, Pactum is now headquartered in Mountain View, California. The company had previously raised around $4 million in funding and with another $11 million in the bank is now well-financed to scale its technology beyond the handful of enterprises it was already working with to refine its AI smarts.
In other words, Pactum is now officially open for business, and it plans to build a platform that can “simultaneously work with many new enterprise customers on multiple deployments,” according to Korjus.
Aside from Atomico, investors in this series A round included Project A, Metaplanet, Checkout.com CTO Ott Kaukver, TransferWise cofounder Taavet Hinrikus, and Teleport cofounder Sten Tamkivi.
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